Global IT report ranks Estonia 22nd

Estonia climbed two places to 22nd in the Global Information Technology Report 2013 of the World Economic Forum. Lithuania was ranked 32nd and Latvia was ranked 41st, reported ERR.

Estonia was the highest ranked Central and Eastern European country.

The table of rankings for 2013 was topped by Finland, followed by Singapore, Sweden, the Netherlands, Norway, Switzerland, the UK, Denmark, US and Taiwan.

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Corporate debt rose in the fourth quarter

The increased financing needs and improved borrowing capacity of firms led corporate debt to grow by 7.3% in 2012. At the start of the year equity was still growing faster than debt, but in the final quarter of the year this trend was inverted by major growth in debt.

Firms continued to borrow from abroad in 2012. The volume of loans taken from abroad and debt issued there grew by 16% during the year and made up 35.6% of total corporate debt by the end of the year. A major contribution to the growth of corporate debt in the fourth quarter came from very large one-off transactions in the transport sector.

Household borrowing behaviour continues to be cautious. The volume of household loans has remained essentially unchanged for the past three quarters. The total household indebtedness measured as the ratio of debt to GDP fell to 44% by the end of 2012. This means that the indebtedness has fallen by 15 percentage points from its peak three years ago and has returned to its level of 2007.

The Estonian economy as a whole was a net lender to the rest of the world in the fourth quarter and in the year as a whole. This was principally due to the cautious financial behaviour of households and the relatively good profitability of firms.

Author: Taavi Raudsaar, Financial Sector Policy Division of Eesti Pank

Read more from: Bank of Estonia

Estonian farming sector most efficient in Baltics

The Estonian farming sector clearly emerges as the leader in the Baltic region in terms of raising the efficiency of production with large enterprises having a dominant position as a result of mergers, whereas in Latvia and Lithuania there are still many small producers, SEB Pank finds.

“The average size of a farm is 48 hectares in Estonia, 20 hectares in Latvia and 10 hectares in Lithuania. Considering the amount of arable land and the number of producers, it can be said that the degree of consolidation is four times higher in Estonian agriculture than in the neighbouring countries,” head of the bank’s retail banking and technology division Eerika Vaikmäe-Koit said.

“If in Latvia and Lithuania 8-9% of all employed persons are engaged in agriculture, in Estonia the rate is half of that at 4.4%,” she added.

Successful agricultural businesses have worked for years to make production more effective and due to that their financial state is stronger than ever before, Vaikmäe-Koit said. “Purchasing new machinery is at the top of the agenda – the leasing of agricultural equipment through SEB soared 59% last year. We issued 38% more long-term investment loans which were mostly used to build new modern cattle sheds,” she observed.

“Consolidation of agricultural production will probably continue in Estonia, Latvia and Lithuania alike as large producers’ sales growth, profitability, liquidity and capitalisation are clearly stronger than those of smaller ones. Investments will be made mainly in the acquisition of arable land and producers and renewal of machinery and equipment this year as well as following years,” Vaikmae-Koit said.

A survey conducted last fall showed that among customers of SEB Pank Estonian agricultural enterprises were planning to invest more than other businesses. Of agricultural enterprises 65% intended to invest over 30 000 euros this year while the average percentage for all businesses was considerably lower at 48%.

Source: Estonian Review